tv [untitled] October 4, 2012 11:30am-12:00pm EDT
jamie jamie jamie you better not a little banker boy again haven't you jamie diamond yes your bank j.p. morgan is in the news again for fraudulent of a song again for defrauding investors again so get ready for the bleeps again yesterday p. morgan bank is being sued by new york attorney general schneiderman e-mail show that bear stearns now owned by j.p. morgan sold c.d.o. as they described as sacks of and also a great thing are m.b.a.'s which i guess means a gargantuan mounds of or to kaiser report is the only financial news program to have been covering this since two thousand and ten with the help of our insider jamie diamond doping gang or mr red. safety
well max yes you're getting into the language of the e-mails that have emerged in this civil lawsuit filed by eric schneiderman j.p. morgan unit is sued over mortgage securities pools new york attorney general eric schneiderman has filed a civil suit against j.p. morgan as a civil suit not a criminal suit the complaint contends that bear stearns and its lending unit e.m.c. mortgages defrauded investors who purchased mortgage securities pakis by the companies from two thousand and five to two thousand and seven so max investors lost twenty six percent of their investment in just the two thousand and six and two thousand and seven bond that is twenty two point five billion of eighty seven point five billion of bonds that bear stearns had packaged and sold up to pension funds and others like you do it to me what did you lose those people twenty six percent of their loving knowingly brutally selling why did you do it you know good rat.
well max we've covered this with terry buell a number of times so we've covered the since november two thousand and ten and in fact the investigation however from eric schneiderman did not even start until april two thousand and eleven so we're way ahead of this story on this thanks to terry buell and nick for bits who we're also going to have on the show next week eric schneiderman did this suit on behalf of the residential mortgage backed securities working group which is allegedly a task force that obama has tasked with actually investigating on a federal and state level these alleged mortgage fraud. and this task force max so in case you really think that jamie dimon something might happen to him or bear stearns to exparel stearns guys well lanny breuer is also on this alleged task force and lanny breuer if you'll recall we just covered him recently where he was the one who spoke before the new york city bar association saying that deferred prosecution arrangements are perfect i love them they're the best way to deter
banking crime. but i didn't. blow straight rat all right we've talked about. prosecution agreements in the past haven't we i mean there are where you can't make this stuff up there guilty but we're going to defer to the prosecution how much that cost j.p. morgan itself in response to the civil suit said we're disappointed that the new york attorney general decided to pursue its civil action without ever offering us an opportunity to rebut the claims without developing a full record instead relying on recycled claims already made by private plaintiffs that this private plaintiff of course max is back a formerly giant insurer who insured many of these c.d.o. isn't mortgage backed securities that have now blown up and we covered this two years ago two years ago well before. or this eric schneiderman even thought of this
and we covered it with terry buell so let's go to that episode and then we've got j.p. morgan bear stearns suing and back of suing these folks for accounting fraud for acting in bad faith it's also a little bit about this yes i am back to didn't do their homework ok when they were insuring some of these products they relied on bear stearns and e.m.c. now by j.p. morgan to sell them product that the raiders said was aaa rated and to say that the loans that they're putting in there they know are going to work out and that they're going to perform ok well am back it has now learned that bear stearns actually according to the lawsuit. knew they were putting in bad loans they knew the loans were defaulting before they even sold it to them you know to you know to terry you know for doing investigative journalism on this piece two years ago exposed and now finally it's coming to light but during those two years time saying see what happens is that a bank loan j.p.
morgan they figured out a way that securitize their potential liability and to sell it on to some teenagers market make money on their guilt they're never going to pay any sizable or meaningful penalty because they can always package their guilt as a guilt back security sell to some poor bank in europe and then that will go bankrupt and they'll porous more austerity measures in greece you know j.p. morgan itself is using the fact that it was bear stearns that package these fraudulent securities as a way for them to whitewash themselves but as terry people mentioned in that interview two years ago and back itself in their civil suit in their private suits against j.p. morgan well they say that it was j.p. morgan itself that basically forced them to go bankrupt by refusing to pay out on the fraudulent bonds that they that had gone bust they should have all you want second thing is this idea that morgan can claim that their responsibility is limited due to the fact that this was all done over a pair. turns but remember the reason why i had the global financial crisis in two
thousand and seven two thousand and eight was the too big to fail concept banks were getting too big so what it congress allowed to happen as a result of that they allowed the banks to get even bigger so now j.p. morgan bought several banks including bear stearns and they're bigger than ever which means our political leverage is greater than ever which means our culpability factor goes down to the lowest level it's ever been and this is of course wall precipitate more bank failures which will then mean that j.p. morgan will buy another bank and become even bigger so robert peston of the b.b.c. covered this in j.p. morgan subprime who are and he said you know that the e-mails note that bear stearns traders on one package of these securities noted that sixty percent of the loans were already delinquent and yet they packaged it up and sold it to investors a further securitization was described as we said at the top of the show a sack of and it's either oh no they would suck udev it is
a you know they package them up they re securitized them they put them all up in a men's thumb and so nice mincemeat christmas pot of cadavers which they created could never collateralized debt obligation they sell to do it your banker b.n.p. in europe then a buck goes out of business and then they impose more austerity measures so the austerity measures are direct result of this fraud and accounting fraud by j.p. morgan and people are suffering. so we covered that last year. carl levin of the senate he was famously the famous senate hearing where they kept on having to bleep it out because it was a deal from goldman sachs that they sold to investors remember that evidence was passed to the department of justice probably lanny breuer and he decided there was no case so if you think there's going to be any sort of case here with the same exact language the same exact apparently sat that was collateralized many times over and sold to all sorts of people but the other thing was because these mortgage
bonds had just gone bust so fast all the mortgages underlying the mortgage securities they went bust so fast their originators of those loans were supposed to buy them back and bear stearns was supposed to get that money from them and then give it to the investors but what their studies did is they did go to the mortgage originators but they gave them a sort of sweetheart deal they negotiated a lower price a lower fee took the money and never gave it to investors so again this is the civil suit remember it's not a criminal case here well you know this is the new cold war you know what i mean by that is remember people lived under the threat of somebody pushing develop the big button starting off a chain reaction of atomic bombs you know this is the new cold war j. me diamond of j.p. morgan if you go after them they'll push the button to crash the market this is the way things operate now so people are living in fear of this world war three which is about to explode because they've got their finger on the button to crash the
market just like nuclear physics lead to the potential to blow up the world you've got economics and financial theory now creating the ability to blow up the financial world people in mainstream media and economists are discussing well if you keynesianism is it milton friedman ism it's like discussing you know the mechanics of an atomic bomb was being dropped on hiroshima that's not really the point isn't the point is that is blowing up and killing people. will the point is that this financial bomb is exploding jamie diamond is the arch master enemy an evil incarnate who is killing hundreds of thousands of people suffering austerity because he's got the weapons of mass financial destruction and he's using them he's using them now well peston at the b.b.c. goes on to say quote it is noteworthy that banks in the u.s. and u.k. that are trying to clean themselves up cannot yet escape from the costs of the sins of their past the such a lame comment they can't escape the sins of their past they've done nothing but
a scape the sins of their pals as anyone go on to jail they paid more than a token civil fine robert peston mainstream blowhard know they haven't what about some deterrent for committing a crime. well speaking of sins and escaping the sins of your past the same story the same stick is going on here in the city of london right here behind us on the headline here on the independent bad bankers war and repent or go to jail right back right that might never happen repent or go to jail this is the mainstream media is trying to play catchup now because they realize that the horrible job they haven't done any significant reporting on out this cold war or financial destruction of mutual destruction has been taken place now they have these bogus headlines that they're going to repent or go to jail i mean it's a little bit too little too late well let me explain what's going on in this headline max britain stop financial policeman promises criminal prosecutions and
every dark corner of the city so this is martin we spoke this week he's now heading the financial conduct authority so frigging british conduct authority he raised the prospect of u.s. style prosecutions of senior executives in the future we want individuals held to account what about now i mean libel or rigging was a grand global cartel there are thousands and thousands of e-mails of them conspiring to rig markets thousands of e-mails of them bragging how much they stole how much how easy it was to take this money and here they say we want these u.s. stuff i hope prosecution just a new guy to come along and administrators pratt making rattling the cages and such most time martin wheatley will be replaced by some new bureaucrat and he will have been kicked upstairs and work for the very regulator that is supposed to be overseeing and i get a nice fat paycheck because he's
a scam artist well in fact speaking of artist max on this final note here we did get a video communique from the artist taxi driver regarding this story bad bankers warned repent or go to jail. possibly in the future not since study said frank. this is i think some rights and. straight i didn't read you know not go and someone might write gary bryson i know and i know about you and exactly did you condone date nights night get. me out what justice system that guy gets i like that i like that i know i bet it said that. then that guy gives up the finals that night finals stuff. up that guy talk perfect sense all right stacy hammer
becoming a barrier like this is. something . when you. do whatever it takes to get on the top of the world. my parents really truly honestly believe that what had happened was as a result of my father's exposure to agent orange i was born with multiple problems . i was missing my leg and my fingers and my big toe on my right foot i use my hands a lot in my artwork i find myself drawing my hands quite a bit to me where my hands you know just as if anyone would. but they do tell a story they tell
kaiser welcome back to kaiser reports i'm now to go to new york talk with kaiser report favorite dr michael hudson dr isom his latest book is the bubble and beyond fictitious capital debt deflation global crisis dr michael hudson welcome to the kaiser report and very much me right now i want to get into some late breaking news here sheila bair tim geithner tim geithner is suddenly emerging as the bogeyman is he rightfully should sheila bair is in the mix talk to talk to tell us what's going on here she will bear is much more angry in this book and she was under famous exit interview with the new york times magazine that she gave when she left she said that. in the first place she well i wanted to close down citibank and get geithner. he used to do it and that when they looked at citibank and the f.b.i.
see the insurance corporation they couldn't disentangle the bank and senate cork with all of it junk mortgage checked evades speculative activities and sheila bair describes in detail the meeting they had at the white house when she said look the treasury secretary came and said we're going to force j.p. morgan chase all the other banks to take twenty five billion dollars loan h.-p. this huge gigantic bailout and she said it was all the same send it back to the entire car that they sent in saving the banking system wasn't against saving the banking system at all it was to save citibank alone because it had been involved so early criminalised and sheila bair came to the alternate banking group of occupy wall street two weeks ago i was there and she said the problem with the financial system is it's been taken over by the mafia and that is the the wall street mafia
essentially it's been criminalized and they've taken over the government to such a degree that when she tried to enforce the law she couldn't do it they've put in a attorney general holder who refuses to prosecute campaign contributors refuses to prosecute wall street and i just got back from the eleventh both the in meeting and the city and also the american military institute meeting in chicago everybody is talking about now the rumors are all out about tim geithner's role in all of this when the obama administration took over planned to leave his role as head of the new york a federal research where he still provides a bass giveaway of wealth to wall street a public expense. it was the thought oh robert ruben. to see if they can become a hit for a salary of about twenty million dollars
a year but the bank has got together and said tim you know we need you in treasury we need a very sophisticated sloan crook like you to bail us out and to give us true billions and billions of dollars trillions of dollars you're the only guy who can do it stay in when the secretary of the treasury when you step down but the japanese told the senate we'll take harry and then you'll get the big pay off you'll be up big millionaire player just do the looting for us it's our inside mail and we'll do it and geithner said there's one thing that i want i thought you would have to make sure that it wasn't warren is out i don't want to run i want complete control so there's no law enforcement there's no in take private foresman there's no one thing if we're going to steal we have to do it right i'm paraphrasing the discussion. it's almost like the old hollywood movies of the 1930's you know and
the mafia would come to that but no one of their guys is district attorney so that he wouldn't prosecute them ever since alan greenspan was put at it over it's over which they put it the regulator in church it wouldn't prosecute let me jump in for a second immense amount greenspan and of course he got rid of brooksley born over to see have to say now you're saying that barrett f.d.i.c she was basically forced to walk the plank and geiger is behind it all the mac to value and master and the result is a crime to genic a criminal enterprise and watch geithner he leaves where he goes well of course he's going to go to wall street somewhere to make a killing on all of his contacts the insider trading but the economic theory that is used to justify this crime spree comes under two had ngs there's the trickle down it can. a mix there's milton friedman monetarism or there's keynesian deficit
spending and but they've tried both of those you've got record deficit spending and record monetary stimulus but the economy is still contracting why is that is just because the criminals of completely taken over and we should look at any economic theory any more dr michael hudson because it's not about economics anymore it's about rape and pillage but you're quite right max this is what makes the wall street financial oligarchy different from the mobsters in the one nine hundred thirty s. movie wall street does something that the money can do they've taken over the educational system and the government statistical system to depict what they're doing as wealth creation and the deficit that you've just mentioned hasn't been the kind of deficits that you had in the one nine hundred thirty s. or that in after world war two there are not deficits of government spending in the real economy to employ labor to build roads to build infrastructure or even to
build armaments these deficits are very different these deficits are money dropped from the helicopter on wall street they call up the head of the federal reserve ben bernanke the cutter ben bernanke he because he said i'm going to drop money on the economy but ben bernanke his helicopter only flies over wall street it doesn't buy over the rest of the economy it only go up buying on wall street and on the banks the big guys at the bondholders know what sheila bair said when it comes down to it people talk about bailing out the economy but she said it's all about the bondholders and the book is sort of an exposé in this and again this is written by a conservative midwestern republican not by a radical and the up old fashioned republicans think they don't exist in the republican party anymore that are coming out with righteous indignation saying what's happening it's wrong it's predatory and. a system cannot be fixed without
sending a whole lot of people i know let me ask his question about ben bernanke game and he came out with his quantitative easing to infinity they're going to buy mortgage backed securities billions of dollars every month for ever dr michael hudson why can't he just retire the mortgages themselves be retired mortgages that would help the mortgage over is the homeowners but that's not his constituency he wants to especially pump money into the banks by. by taking twenty nine trillion dollars worth of chunk mortgages on to the government spent on sheets giving in exchange. bank. commercial bank deposits at the fed and government ious and then he takes these having what these at face value hundred percent you instead of ten percent value you know sells them at a very very low price at ten cents on the dollar and the banks that have already
got a hundred percent value for these mortgages can buy it back from the government at ten cents on the dollar and make another twenty nine trillion dollars let me ask you a question you wrote in your latest piece so instead of financing it is the u.s. banks don't lend against what may be produced in the future they make loans against collateral already in place including entire companies they wrote a long piece of excellent piece talking about the financialization of the global markets this seems to be the nettle of that piece right here this question of collateral and you're contrasting today's environment with the old days where collateral actually meant something but talk a little bit about that well that's what makes the bubble economy different from what's described in the textbooks if you look at the textbooks that students are taught you have a picture of a factory with smokestacks and workers with lunch pails walking in and out of the factory produce goods and services the workers spot but that's not what banks make loans for. or they don't make loans to build factories or to build anything they
make loans only against collateral that's already in place real estate that's already there or oil and gas reserves or the end of corporate raiders to take over a company that's in place and the corporate raider doesn't build up the company and hire more labor with lunch pails it sizes the labor and cuts costs a grabs the pension funds and says we're going to go bankrupt if you don't renegotiate your actions from defined benefit or you know what you're going to be getting to defined contribution plans for all you know is what you pay in ok let me do a bit going to go shave are going to go bankrupt and wipe out your pension altogether so you know. i think part of a predatory and shrinking process let me let me jump in for a second because the comment was made this week from a private equity investor saying we can get money from the banks to buy companies but we can't get loans from the bank to service the companies that we bought in other words the companies that they bought our car companies that need money to
continue in operations they can't get those loans but that's your point they can't they can't get loans to take over companies using the assets of the acquired company as the collateral that's kind of we are saying right yes the bank credit is only available for loading it's not available to maintain industry as part of the neoliberal plan that was brought in by reagan and thatcher in the 1980's credits available only for extracting money from the economy quickly only for emptying out the economy and shrinking it until the united states ends up looking like greece or ireland or bia or iceland so as soon as the election's over we're going to see the result of just an internal economic collapse everybody's bailing out all right finally you see that in europe we are seeing an oligarchic counter revolution against democracy explain that. angela merkel explained last year
that when the greeks are going to have a referendum on do they want to have those austerity to pay taxes to pay the bankers she said the problem with austerity is they're going to vote against bailing out the bakers we cannot afford democracy so she said we have to put in a technocrat a technocrat is a euphemism for a bank lobbyist like tim geithner is it a technocrat. and so they said we're going we have the european central bank are going to point a technocratic ruler what the romans called a proconsul to act on behalf of the banks you cannot vote that's what central bank independence is the government policy in your country and greece and spain and portugal is going to be controlled by the bankers bankers are independent of the political process and the european central bank are telling them what to do by what's called can do pinout these in other words we set the conditions on which we
will be willing to bail out your banks so that your bank can pay us who've all want money to them so we will lay down the can do it for you to us and the good the greeks say wait a minute we don't want to pay you we want the economy to run for ourselves and the europeans are saying that's the microstate you can't have it anymore that era is over. all right dr michael hansen the godfather of economist thanks so much for being on the kaiser report thank you very. going to do it for this edition of the kaiser report with me max kaiser and stacy herbert my guest dr michael isn't going to say i mean please do so at kaiser report at r t t v dot are you going next time .